Defense Supply Center Richmond

1
Defense Supply Center Richmond

• Acquisition Initiatives
• DSCR Business Conference
• 7-10 June 2004

2
Agenda

• Long Term Contracts
• Mid 909 - Government Source Inspection
• Time Definite Delivery (TDD) Standards Formerly
  Uniform Materiel Movement And Issue Priority
  Systems (UMMIPS)
• Pricing - Post Award Review Team(PART)

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Why Long Term Contracts?

• Better Meet Needs Of The Warfighter
• Places Both High And Low Frequency NSNs On LTC
  (Focuses On SMS NSNs First)
• Provides Reduced Acquisition Lead Time(ALT)
• Provides Fixed Production Lead Time (PLT) For
  Planning Purposes
• Reduces Long Term Administrative Burden For
  Contractors

4
Corporate Contract Goals

• Shift From Individual Contracts To Long-Term
  Grouping Of Requirements Based On Anticipated
  Demands
• Improve Readiness Through Increased Efficiencies
  In Buying And Reduced Lead-Times
• Reduce DLA Inventories
• Introduce Best Commercial Practices
• Increase Use Of IT And EDI

5
Contractor Advantages

• Eliminates Multiple Contracts
• Reduction In Administrative Time And Costs In The
  Long-Run
• Long-Term Agreements And Consolidated Demand
  Result In Better Deals With Suppliers
• Data Sharing Provides Better Visibility Of Demand
  Leading To Better Projections Of Demand
• Central DLA Buying Focal Point
• Increase Efficiency And Consistency In Dealing
  With DLA Fewer POCs And One Set Of Terms And
  Conditions

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Government Advantages

• Increases Efficiency And Reduce Administrative
  Effort
• Decreases ALT And PLT
• Reduces Inventories
• Improves Supply Availability
• Lowers Costs
• Expands Partnering With Contractors

7
Customer Advantages

• Leverages DLA Buying Power
• Focuses On Customer Support
• Improves Readiness Of Various Weapon Systems
• Provides On-Time Delivery To End-Users
• Satisfies Requirements For Multiple Years
• Provides Predictable PLT Times Leading To Better
  Supply Availability

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Two Approaches

• Corporate Contracts
• Market Baskets

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Corporate Contracts

• Features
• Sole Source Items On A Single Contract
• Develop Long-Term Relationships Based On DLAs
  Total Requirements (DSCC, DSCP, And DSCR)
• Requirements-Type Contracts
• Allows Flexibility And Efficiency In Negotiating
  Contract Terms
• Negotiate Terms Once For The Entire Population Of
  Items
• Price Items In Groups And Grow The Contract Over
  Time
• Negotiate Length Of Contract
• Tailored SOW And RFP

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Corporate Contract Challenges And Solutions

• Contractors New To Concept And May Have
  Difficulty With Allocating Resources For Pricing
• Work With Vendor To Determine How Many Groups Of
  NSNs To Price Per Phase
• Start With Small Population And Highest Demand
  Items, Then Grow Contract
• Add Infrequent NSNs As Un-Priced

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Corporate Contract Challenges

• Difficult For Contractors To Price Low Demand
  NSNs
• Vendor Can Provide DLA With Economical Order
  Quantities
• Multi-NSN Procurements Result In Higher Dollar
  Values
• Cost Or Pricing Data And Sub-Contracting Plan
  Requirements
• Establish Pricing Methodology And Streamline
  Process Ex. FPA
• DCAA And DCMA Can Provide Assistance In
  Developing Cost Accounting Systems
• DSCR-DU Can Provide Sub-Contracting Plan Template
  And Guidance

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Market Baskets

• Fully Competitive Items Grouped Together Based On
  Similar Manufacturing Processes (WICAP Groupings)
• Indefinite Delivery Indefinite Quantity (IDIQ)
  Type Contracts
• Contract Length 5 Years (2 Or 3 Year Base
  Period, With One-Year Option Provisions)

13
Market Basket Lessons Learned

• Limited Success With
• Weapon System Focus
• Large Number Of NSNs
• Narrowly-Focused Set-Asides
• Limited-Source Acquisitions
• Greater Success With
• WICAP Groupings Focused On Our Business Units
• 25-50 NSNs At A Time
• 100 Small Business Set-Asides
• Fully Competitive Item Descriptions

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Market Basket -Important Points

• FOB DESTINATION TERMS
• MID 909 Inspection/Acceptance Terms At
  Destination
• Cannot Award FOB Origin, I/A Point Destination
• INDEFINITE QUANTITY FORECASTS
• MOQs 25 x Previous 4 QTR QTY
• EDQs Forecasts Based On SOH, D/I, QFD, B/Os
• Consider MOQ When Setting Prices If EDQ Is Zero

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Market Basket-Important Points (Cont)

• Fair And Reasonable Price Determination
• Base Period Unit Price Must Be In Line With
  Governments Expected Price
• Governments Expected Price Derived From
  Historical Fair Reasonable Price W/ PPI
  Escalation And Quantity Difference Consideration
• Unbalanced Pricing For The Base Period
• Additional Factors For Price Reasonableness
  Determination
• Adequate Manufacturer Competition
• Option Period Escalation Rates

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Market Basket Useful Websites

• Special Acquisitions
• http//www.dscr.dla.mil/proc/VPV/vpvhome.htm
• Market Baskets
• www.dscr.dla.mil/kd
• Information On Specifications/Standards
• http//assist.daps.dla.mil/ or http//www.dodssp.d
  aps.mil
• Drawings
• http//www.dscr.dla.mil/tdmd/mb_index.asp
• Procurement Gateway
• http//www.dscr.dla.mil/proc/gateway/pg.htm
• WICAP Information
• http//www.dla.mil/supplier/WICAP01.asp
• FedBizOpps
• www.fedbizopps.gov
• BSM Website
• https//dlaweb.bsm.dla.mil/SRweb/

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Summary

• Long Term Contracts Have Numerous Advantages To
  The Warfighter, The Contractor, And DLA
• Mix Of High And Low Demand Items Is Necessary
• Assistance Is Available To Overcome Barriers To
  LTCs
• DLA Is Constantly Improving Our Approach And We
  Welcome Your Feedback

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Government Source Inspection(GSI)

• On Aug 20, 2003 Proposed DFARS Case 2002-D032 Was
  Issued
• Represents Major Changes To DFARS 246 For Buying
  Activities
• States Buying Activities Shall Not Delegate
  Contract Administration To DCMA Or Require GSI On
  Contracts, Purchase Orders Or Delivery Orders
  Valued Below 250,000 Unless- (Exceptions)

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Government Source Inspection(GSI) (Cont)

• Exceptions
• Mandated By DoD Regulation
• Required By Memorandum Of Agreement (MOA)
• Contracting Officer Determination
• Significant Contract Technical Requirements
• Critical Product Features/Characteristics And
• Award Made To A Manufacturer/Producer Or A
  Non-Manufacturer Or Non-Producer And Specific
  Government Verifications Have Been Identified As
  Necessary And Feasible To Perform

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Government Source Inspection(GSI) (Cont)

• What Is DLA Doing To Prepare For The Change?
• Screening NSNs For The Purpose Of Reducing GSI
• Coordinating With DCMA To Establish Memorandum Of
  Agreement (MOA)
• Developing New Policy At Enterprise Level
• Implementing New Rules/Tools To Reduce
  Procurement Driven Origin Inspection

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Government Source Inspection(GSI) (Cont)

• What Can Vendors Do To Prepare For Change?
• Reconsider Requesting GSI When Not Technically
  Required
• Discuss Alternatives With Buyers
• Sign Up For Wide Area Work Flow (WAWF)
• Read Solicitations Carefully
• Evaluation Rules May Change

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Time Definite Delivery (TDD)

• Agency Policy Requires Delivery Terms That Meet
  TDD Standards For Requisition Processing As
  Promulgated In DoD Supply Chain Materiel
  Management Regulation DoD 4140.1-R, App 8.
• Why Is TDD Important?
• Provides Customers With Defined Times For
  Requisition Processing And Measures Materiel
  Movement From Requisition Submission To Materiel
  Receipt.

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Time Definite Delivery (TDD)

• Planned DVD Contracts Must Adhere To TDD To
  Ensure Maximum Support For Critical Warfighter
  Missions.
• DLA Directors Memo Dated 11/22/02 Directed All
  ICP Commanders To Review All Existing DVD
  Arrangements For Compliance.

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Time Definite Delivery (TDD)(Cont)

• Abbreviated TDD Standards
• For CONUS Shipments (Including To CCPs/Ports Of
  Loading)
• FOB Destination
  FOB Origin
• Priority 01-03 2 days 1
  day
• Priority 04-15 5 days 1
  day
• Priority 04-15 10 days 3
  days
• For OCONUS Direct Shipments (Excludes CCPs/Ports)
  
• FOB Destination
  FOB Origin
• Priority 01-03 10 days 1
  day
• Priority 04-15 14 days 1
  day
• Priority 04-15 23 days 3 days
• (With RDD Of 444, 555, 777, N, E Or
  Julian Date Within 8 Days Of Order Receipt.)
• While TDD Delivery Is Specified As Not More
  Than 23 Days, DSCR Policy For LTCs Is To Specify
  A Shorter Delivery, When Realistic.

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TDD Exceptions

• LTC Supports A Specific Customer And The Customer
  Has Agreed To The Specified Delivery Times.
• LTC Is Only For Non-NSN, Part-Numbered Items.
• LTC Is For Commercially Available Items
  (Household/ General Purpose Items Only) Where The
  Vendor Can Support A Contract Delivery Date Not
  More Than 3 Days Greater Than TDD Total Order To
  Receipt Time (TORT).
• LTC Is For Non-Stocked Items Only (Acq Adv Code
  J). Efforts Should Still Be Made To Negotiate
  Delivery As Close As Possible To TDD Standards.
• LTC Is For Kits Used By Maintenance Depots.

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Time Definite Delivery (TDD)

• What If TDD Cannot Be Met?
• If The Item Meets An Exception, May Be Able To
  Add Additional 3 Days To Delivery (Commercial).
• Remove DVD From Arrangement. Continue LTC With
  Stock Support Only.
• Support By Business Case Analysis

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Post Award Review Team (PART)

• Purpose
• To Address Potential Overpricing Concerns
• Seek Corrective Actions When Overpricing Is
  Confirmed
• Take Actions To Prevent Future Overpricing
• Mandates
• Public Law 105-261
• DoD IG Report Dated May 30, 2001
• GAO Report Dated April 2002
• DSCAP 15.404-1(b)(7)

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PART (Cont)

• Process
• Pace/BPA
• Monthly Data Query Of Automated Contracts
• Contractor Is Contacted For Supporting
  Data/Explanation Where Overpricing Is Indicated
• Manual Awards
• Quarterly Data Query Of All Contracts
• Price Analysis Used To Identify Potential
  Overpricing
• Contractor Is Contacted For Supporting
  Data/Explanation Where Overpricing Is Indicated
• Contractor Response Is Reviewed To Determine If
  Explanation Is Adequate Or Corrective Action
  Required

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PART (Cont)

• Corrective Actions
• Voluntary Refunds
• Breakouts/Reverse Engineering Considered
• Coordinate With Program Managers And Major OEMs
  To Develop Solutions

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• QUESTIONS?